Grains dip ahead of USDA reports

U.S. soybean and grain prices slid Monday, pressured by profit-taking as traders braced for a key government crop report later this week.

Soybean futures retreated after rallying for most of the past three weeks amid concerns that hot, dry weather in the Midwest will reduce the size of this year's crop. Prices had jumped to a six-week high last week after surging 13% in August.

On Monday, soybean futures for November delivery, the most-active contract, fell 11 1/4 cents, or 0.8%, to $13.56 1/2 a bushel at the Chicago Board of Trade. September soybean futures, lightly traded ahead of their expiration Friday, declined 32 3/4 cents, or 2.3%, to $14.04 1/4 a bushel.

Traders are preparing for a monthly U.S. Department of Agriculture report Thursday in which federal forecasters are expected to trim their projections for both soybean and corn production this year due to the emergence of drought in parts of the Farm Belt, including Iowa and Minnesota.

The nation's soybean crop is more vulnerable to damage than the corn crop because it has a later growing season. Corn largely underwent its main development stage in July, when weather conditions were more favorable.

Analysts said soybean prices already reflect expectations the USDA will pare forecasts for soybean output, and some traders on Monday were trying to shed risk in case the report brings surprises.

"With these soybeans, it's do or die time," said Hector Galvan, senior broker with RJO Futures in Chicago. "There's still an air of insecurity" about how much the adverse weather will hurt the crop.

Weather forecasts project mostly hot, dry weather for Illinois, Indiana and Iowa--all big soybean producers--over the next week. And weather outlooks for a week to two weeks from now also show relatively little rainfall, analysts said.

For soybeans, "there's a window of opportunity for rain to still help the crop, but the forecasts really aren't leaning that way," said Joe Vaclavik, president of Standard Grain Inc., a Chicago brokerage.

Buyers of soybeans, including packaged-food companies and livestock producers, are closely watching the crop because U.S. supplies are historically tight following last summer's severe U.S. drought. Much of the nation's soybean crop will be harvested later this month and in October.

Corn futures also fell Monday, pressured by declines in soybeans and weakness in cash markets as early-harvested corn in the southern U.S. increases domestic supplies. Most-active December corn dropped 4 3/4 cents, or 1%, to $4.63 1/2 a bushel. September corn fell 14 1/4 cents, or 2.9%, to $4.77 1/4 a bushel.

Wheat futures, which often trade in tandem with corn, also declined. Most-active December wheat futures slipped 6 1/2 cents, or 1%, to $6.41 1/4 a bushel.